Major Technology Trends Affect Retail Supply Chains in 2018

In the past few years, the retail space has evolved more than it has in decades. This evolution is seen not only in terms of the technology and innovations in the industry but also in the expectations of consumers.

Thanks to e-commerce giants like Amazon, consumers have high expectations for an on-demand experience. This added pressure for online retailers is added to the compounding issues of inventory management and demand forecasting.

A recent study by the D3 Retail Supply Chain Summit, The 2018 Retail Supply Chain Report , reveals many of the challenges and opportunities present in the retail sector. As the industry gets more complex and demanding, retail organizations are making significant innovations to combat these changes and enable new chances for growth.

Biggest challenges facing the retail supply chain

A number of the major problems that retailers face today are the same things they have struggled with for years. These challenges have merely gotten more difficult as the supply chain becomes more complex and customer expectations grow. The 2018 Retail Supply Chain Report found that the top three challenges in 2018 are:

Demand forecasting

It is no surprise that demand forecasting was identified as a top challenge by 66.7% of the senior retail supply chain executives surveyed. While forecasting has always been difficult, there are more factors than ever to affect demand. A rise in competition, decrease in brand loyalty and increasingly random and extreme variables make it difficult to reliably predict demand for products. While most retail supply chains have access to more data than ever before, analyzing it in an organized and reliable model is proving to be harder.

Inventory optimization

The difficulty of forecasting further increases the challenges of inventory optimization, which was listed as the second biggest challenge by 63.3% of survey respondents. The report found that the average retail supply chain has 93.5 logistics partners and 1,342 suppliers, so it is no wonder that only 17% of organizations have 100% visibility over their inventory. Meanwhile, fulfillment costs are increasing every year, up an average of 12% in 2018.

Customer experience

One of the biggest drivers of increased fulfillment costs and a more complex supply chain is the need to meet customer demands. The fact is, shipping is not free. Unfortunately, most consumers now expect free and expedited shipping from online retailers. They also expect a streamlined, omni-channel retail experience which increases costs and makes it more difficult to predict demand trends.

The responsibility of customer experience (CX) has landed on the supply chain in the past couple of years. According to 46.2% of survey respondents, CX is a crucial part of measuring supply chain performance. This leads to 61.5% of supply chains giving CX measurements significant or key consideration when making operational decisions, according to the Retail Supply Chain Report. 

Unfortunately, this priority has not led to significant spending on customer experience technology. Where are supply chain executives investing in new technology and innovations to meet these rising challenges?

New approaches in technology use

While some of the challenges in the retail supply chain have become more customer facing, the industry’s priorities are still squarely focused on technology investments that can reduce costs and keep up with rising inventory demands. According to the survey, the areas of focus for supply chain technology in 2018 are:

Inventory management

The majority (56.7%) are investing in improving inventory management through logistics systems which combine transportation management systems (TMS), artificial intelligence and business intelligence. Creating a single view of inventory across all channels is key to improving visibility and identifying opportunities for inventory optimization.

Warehouse wanagement systems

While warehouse management systems (WMS) is the second highest technology priority for 50% of supply chains, it is still slow to see full adoption. The main barrier to this is integration with legacy systems. WMS solutions that can integrate with existing legacy technology and with emerging AI and warehouse robotics are crucial for reducing upfront costs and improving the overall efficiency of the warehouse.


As we said earlier, the main issue with forecasting isn’t the lack of information but the challenge of processing it into reliable demand forecasting. New forecasting technology is combining mobile intelligence, integration intelligence, consulting intelligence, business intelligence and artificial intelligence and plugging it all into existing systems to help power inventory management and create real-time analytics that greatly improve forecasting. With the number of channels and variables affecting demand, having analytics tools that can combine all these individual factors is crucial. 

Based on the challenges facing the retail sector, it is clear the industry is in need of practical and relevant ways to predict demand while still delivering a quality, omni-channel consumer experience. As supply chain executives continue to focus on technology that can solve immediate cost and inventory challenges, they must also consider solutions that will be able to solve these aforementioned needs. Choosing logistics solutions that integrate with legacy systems and can offer a real-time, 360-degree view of the supply chain will ensure they are able to capture a competitive advantage as CX and forecasting continue to increase in importance.

1 comment on “Major Technology Trends Affect Retail Supply Chains in 2018

  1. michaelmaloney
    December 3, 2018

    It is absolutely true that e-commerce has seen a huge spike in recent years and major online retail giants are the main influential platform. Nowadays, consumers are basically concerned about having convenience at their fingertips. They need to know that a certain product or service that they need can be hired in mere seconds with just a touch of a button. That is how businesses need to keep up.

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